The number of suspected identity theft cases is on the rise, but financial institutions are managing to catch more than half of fraudulent auto or student loans involving identity theft scams before funding, according to a study released Monday by the Financial Crimes Enforcement Network.

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The FinCEN report showed that the number of Suspicious Activity Reports (SARs) involving identity theft scams filed by financial institutions rose 123% between 2004 and 2009. In comparison, the total number of SARs filed increased 89% during the same time period.

Credit card fraud was the most reported type of identity theft, but those types of reports actually dropped somewhat while reports of consumer loan fraud rose significantly, according to FinCEN.

The study found that financial institutions reporting auto loan fraud facilitated by identity theft succeeded in identifying the loans as fraudulent prior to funding about half of the time. Likewise, those reporting student loan fraud involving identity theft caught the fraud before funding in more than 54% of the cases.

SARs are important tools in deterring illegal activity, FinCEN Director James H. Fries Jr., said in a prepared statement.

"In many instances involving identity theft, the vigilance of employees of financial institutions is apparently deterring greater losses when the employees suspect loans are tied to false identities," he said.

FinCEN defines identity theft as unauthorized use of identifying information unique to the rightful owner.

In nearly 27% of SARs involving identity theft scams, the victim knew the suspected thief; he/she is usually a family member, friend, acquaintance or employee working in the victim's home. Victims discovered identity theft through review of their own account activity in 28% of the filings in the study, while routine account monitoring by financial institutions was credited with catching identity theft in about 21% of the cases.

Dan Fisher, president and CEO of The Copper River Group, a Fargo, N.D.-based consulting firm to the financial industry, said financial institutions could do more to reduce fraud by digging deeper into their SARs data.

"They spend more time focusing on their compliance, making sure they don't get criticized by examiners, than really tearing into this data and seeing how they could take it to the next level," he said.

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